Tumultuous times for telecommunications

Writing about telecommunications used to be an easy gig, but not so in 2004. It’s been a very eventful year, with plenty of surprises. Next year looks like it’ll offer up more of the same, but let’s recap what happened in ’04.

This year started off with a nasty hangover from 2003: the Commerce Commision’s decision to do a u-turn on local loop unbundling. Many were staggered by the decision and savaged the reasoning behind it — just like the Ministry of Economic Development. However, the Government cemented the decision in the middle of year despite opposition from the MED and — sources say — Communications Minister Paul Swain, who wanted to send it back to Douglas Webb. The cabinet overruled Swain (rumour has it that it was Helen Clark who put her foot down) and we got the odd and still not fully functional “partial unbundling” instead.

Although hopes of true telco competition were in tatters, New Zealanders could look forward to ISPs getting to wholesale DSL and companies could buy data circuits wholesale too. Unfortunately, the Unbundled Bitstream Service DSL turned out to be a damp squib. Not only were the service specifications the lowest possible that Telecom could get away with — 256kbit/s downstream and 128kbit/s upstream, one second latency in each direction and unspecified packet loss — but it was also plagued with technical problems.

At one stage, it even looked like UBS would not be available until next year and Telecom released an interim UBS that was a straight clone of its Jetstream Surf that providers could sell for the time being.

However, at the same time, Telecom trumped the market and released new retail plans of its own — 1 and 2Mbit/s Jetstream offerings that had faster upstream than UBS at 192kbit/s. They are priced at about the same level as UBS, and customers on the previous “flat-rate” 256kbit/s Jetstream Surf plan were automatically upgraded to the 2Mbit/s product.

What’s more, the new plans were not available as wholesale UBS. No wonder then that TelstraClear and Ihug got brassed off and applied to the Commerce Commission for access to the speedier plans. TelstraClear also wants to resell Telecom’s lucrative Private Office Networking high-quality business DSL and, to everyone’s surprise, the Commerce Commission said it would not only investigate the applications but also promised to do so very quickly. We may even hear more before the end of the year.

When I said above that providers couldn’t resell the faster DSL plans, that’s not actually quite true. Telco regulation in NZ ends up as a piecemeal effort, and there was actually one other determination for access to Telecom’s residential services this year as well as UBS.

Telecom has to offer products like Jetstream and voice lines to access seekers at a margin set by the Commerce Commission. For Jetstream, it’s a meagre 16% but for voice lines it is only 2%. And, if providers want to resell Jetstream, they have to take over customers’ voice lines and their toll calls and credit risk, and make it work with those slim margins.

TelstraClear did just that, and launched its nationwide telephone service in November. It’s not true TelstraClear telephony, but the Telecom brand has left some people’s bills.

In the mobile area, Telecom stole a march on Vodafone by launching its 3G network this year. Vodafone says its will be ready in 2005 and reckons it’ll beat Telecom’s. We’ll see, but at the same time we noticed both telcos were squealing when the Commerce Commission said it wanted to chop the mobile call termination rates they charge each other which are some of the highest in the world. In Australia, Telecom’s wholly-owned subsidiary AAPT thinks it’s great that the regulator there wants to slash the rates; not so in New Zealand. We never managed to have Telecom explain the diametrically opposite positions in the two countries.

Although there were those who accused the Commerce Commission of being Telecom’s pocket poodle when the local loop unbundling was canned, the watchdog is currently snapping at the heels of the telco. Much to everyone’s surprise, the Commission decided this month to investigate Telecom for anti-competitive behaviour.

The investigation is under the Commerce Act, which, unlike the Telco Act, has some real teeth and was the tool the Commission earlier chose to take Telecom to court over the 0867 and data tails cases. Both of these may be resolved next year, in fact.

Speaking of the Telco Act, the government now realises the Act needs enforcement dentures because, well, it has none currently. And, the whole process needs to be much faster as technology waits for nobody, even in Telco Land. We'll see how that goes but the fact that the review of the Telco Act won’t be ready until June next year and the long list of excluded items don’t exactly fill us with hope.

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